tv Closing Bell With Maria Bartiromo CNBC May 20, 2013 4:00pm-5:01pm EDT
maria has exclusively the president of blackrock, rob kapito. stay tuned. retail earnings tomorrow. could set the tone for tuesday that traditionally in 2013 has been higher. second hour of the "closing bell" with maria is coming up right now. i'll see you tomorrow. and it is 4:00 on wall street. do you know where your money is? welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. market in the red on concern the federal reserve could begin tapering down the economic stimulus measures. take a look at how we're settling out on the street today with the dow jones industrial average down a fraction at 4:00. on the east coast the dow down 18 points at 15,336. we had been in unchartered territory once again earlier only to reverse after we did hear from some fed officials talking about the beginning of the end of the stimulus should happen. real opinions coming out of fed officials today. nasdaq down 2 1/2 points.
s&p 500 flat on the day, down just a fraction. market gets off this new week to a slow start. bob pisani recapping the volatility. >> it finally happened. we had a down day. dow industrials, charles evans from the chicago fed came out with comments in the middle of the day. he said, look, bond purchases are going to continue until the stnl improvement in the labor market. then he used the magic word. he said escape velocity may be achieved in 2014. meaning the economy is improving, the fed is doing the right thing and implying somewhere down the road there's an end to all these bond purchases. that dropped the markets in the mid m of the day. sectors still risk on. still financials, energy, tech, materials, generally still holding up fairly well for the markets here. we finally got a bounce in gold and gold stocks. my heavens, they've been dropping almost every day. we got an options expiration next week. a lot of short positions in gold, i can assure you. rich fisher was on this morning stating that on cnbc the fed will not stop buying gold. of course, that's also helping it as well. energy stocks did very well
today. look at the x op. this is now you can own natural gas stocks. we had the obama administration on friday approving that texas export facility. we have a number of stocks in that group doing very well. a new high for the xop. home depot is going to be tomorrow. i'm eagerly awaiting what they have to say. home improvement really doing well even though we had a cold winter, cold spring. overall we're expecting fairly good comments from them. comp store sales should be up around 4%. that'll be out just before the bell. finally, a lot of talk about an unusual series of trades that happened friday at the close in an anadarko petroleum. all of these were busted later. anything below $87 and change was busted. above that was allowed to stand. the bottom linemaria, we don't have limit up, limit town rules. we don't have particular stock breakers in effect in the last half hour like we have throughout most of the day.
occasionally this can still lead to some volatility. another reason i support stock breakers. as long as the market is open i think we ought to have them. i think is a good example of why we need them throughout the whole day. back to you. >> thank you so much. as you just mentioned, bob, no gain through the dow today. there's always tuesday. if the dow closes in the green tomorrow it would be the 19th tuesday in a row for this market to trade higher. straight to the market and how to invest. sam stovall. tim spees from eisner app ner. pooter anderson from congress asset management. jeff hussy from russell investments. good to see you. thanks for joining us. tim, i'm going to kick this off with you. what's your take on this environment? we haven't heard from you. a pe at 16 times earnings on the s&p 500 according to sam stovall and a federal reserve that continues buying bonds every month. >> the argument is those valuations are still low, at least when you look at historical values. our clients, we still warn them about volatility. you could see some volatility in some drops this summer. so i don't think it's
necessarily going to be a smooth trajectory. >> but? is there a but in there? >> there's no but. i don't think so. >> so not a smooth ride. do i want to put money to work in the market or not is the bottom line? >> i think if you have a horizon of more than five years, i think yes. you look at the quality of the balance sheets now, where we were five years ago. earnings, cash flows. most companies look very healthy generally. there are some sectors that don't look as good as others. financial service has certainly come back. with the improving housing market you're going to see home builders coming back. definitely opportunities. >> jeff hussy, i made the point earlier at this point you look at private banks and private wealth managers. 30% of customers are now still sitting in cash. meaning that there could be a major possibility of a ramp up. that money coming out of fixed income and moving into cash. we haven't seen that -- i'm sorry, moving into stocks. we haven't seen that yet. are you expecting that? >> we haven't seen that. we haven't seen the great rotation from bonds, either, we
talked about the beginning of this year. i think -- you know, i think people feel qe is a little bit temporal and amorphouamorphous. they feel qe has bumped up stocks temporarily. in fact, unfortunately bernanke has said the intent is to pump up stocks and create wealth for the average stockholder. i think that's creating some hesitation by the average investor. and will probably continue to keep some hesitation on the part of the average individual. >> you don't think we'll ever see that ramp up, then? you don't think the potential for even a flood of new money coming into stocks from fixed income will actually materialize? >> well, i think at some point -- i mean, everything's possible. i think with more certainty around the government regulations out there, with more certainty about qe, with more certainty around a lot of things i think that you will see people move in. we've had 120% increase in equity prices. and, you know, that should
entice people to move, and they haven't. that does tell you something about the hesitancy of the average investor. it's going to take a little bit of time and healing of the wreckage of 2008 for investors to actually move off the fence. even though it's already been six years from now. >> it's all about confidence, isn't it, sam? >> absolutely. it's a good point you brought up earlier when we were tis cussing about qe infinity. if the thought is that the fed is going to be pulling back on that, could that be a trigger for a selloff. but my feeling is will that be like your doctor saying i'm going to take you off the iv and therefore that's a bad thing? no. it's because you're improving. i think what that implies is that investors in general are just not very confident that the underpinnings of our economy and the global economy are strong enough to be able to withstand this. and we need that additional central bank liquidity. >> the last time we talked about this, you said earnings were strong. the bottom line, though, revenue is not. you're not seeing the end market demand you really would like to at this point in the cycle.
>> exactly. i think that's the revenue coming in weaker where most of the earn x games are coming from cost cutting, share repurchases, et cetera. we're in record territory when it comes to earnings. how we got there is causing some people to say i'm having second thoughts about this. if we do get that ramp up to take place in '14 where we do see the economy getting stronger, then we probably will see better revenues. >> peter anderson, how are you allocating capital here? >> i have a totally different take on this whole situation, maria. i am definitely very, very optimistic right now. i think that that 30% cash on the sidelines is absolutely itching to get put to work in equities. we've had that cash for five years now. and in our direct experience with high net worth clients, they are absolutely looking to build back some wealth in their portfolio. they've made back everything from 2008. and now they're wondering where to best deploy that cash. fixed income, interest rates are
absolutely going to go up. i don't know why people are concerned about that. i think that's actually a very positive sign. if rates are going up, it's because the economy is strengthening. and that's a very good thing overall for generalized portfolio investors. >> so what sector leads this rally rest of the year, then, if, in fact, your scenario materializes? >> well, i think, for instance, financials. they have been on the sidelines for some time. i think that's a very, very attractive, selectively, though. we never advocate going wholesale into any of these industrial investment sectors. you have to look at the individual stories. mind you, i'm so optimistic there are names in our portfolio now that have been up -- they're up 80% year to date. that's in the face of a pe for the general equity markets that some people are fretting over. and i would say to them that are fretting over those high levels, you can always find securities
in any sector that are reasonably valued and just dig in right now. >> we'll leave it there. gentlemen, thank you very muff. appreciate krour conversation today and your insights on this market. bertha coombs has an earnings alert. >> urban outfitters out with results on the bottom line. they actually beat coming in with 32 cents a share. the expectation had been for 29 cents a share. but revenues were light on the topside. one of the areas that they said they had strength was in their direct to consumer, their online sales. those were up. but the comps with up about 9%. the street looking for a little bit more. they also said some of that better margins on that were offset by delivery expenses. you always have to watch out for those. >> thank you so much. up next, the firm manages more money than the federal reserve. how about that? blackrock's president rob kapito is with me. he just rang the closing bell. he's making his way to the set and he'll be here exclusively.
the next 24 hours could shape the future of jpmorgan as well as the global banking system. how the jpmorgan shareholder vote could be the tip of the iceberg on what will be the new normal for banks. that and a lot more coming up on "closing bell." stay with us. ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises.
welcome back. the dow and the s&p 500 didn't move much today. but some big mover on individual stocks. bert berthacoombs. >> energy was the best performing sector today with a 20-monday high on the xop oil and gas etf. best performers wpx energy, to sorrow and noble. conoco at a 52-week high. after the obama administration approved a $10 billion nat gas export facility in texas last friday. conoco is one of the investors in that facility that hopes to ship nat gas to japan. new highs in solar energy. j.a. solar reporting a loss narrower than expected due in part to stronger pricing trends according to analysts at piper jaffray. also rival first solar up over
9%. one of the best performers in the s&p. camp bell's soup after reporting better than expected profits and raising outlook the stock fell steadily from the open. investors taking profits it seems on the stock up 31% year to date. one analyst calling the company's tone on the conference call about new product launches a bit conservative. priceline, though, flying high today like it's 1999. an upgrade from a buy to a hold. deutsche bank sending the travel site shares to a new 14-year high, ma rhee wra. back to you. >> thank you so much. meanwhile, blackrock has close to $4 trillion in assets under management. that money at work in today's market. the firm has been ahead of this historic rally. where do you see opportunity right now? we want to get into that right now with blackrock. joining me in a cnbc exclusive is president of blackrock, robert kapito. he rang the closing bell a few minutes ago and launched new etfs. thanks for joining us. >> thanks for having me. >> let me ask you first about this rally. do you look at this market sometimes, it goes up on good news, goes up on bad news, and
think, wow, this market just won't quit? do you think it's sustainable and has legs from here? >> i definitely think it does. first of all, there's just an incredible amount of cash that's on the sideline. every time i come on i talk about people feel they missed it, they missed it. they really didn't miss anything. i still think the market has a lot of legs. i know that there's going to be buybacks this year. we estimate about 300 billion in buybacks. companies are buying back their stock, raising dividends, taking equity out of the market. there's not enough ipos replacing that stock. so the stock market can continue to rise. i think companies are actually seeing better top line growth than they've seen before. it all means that valuations are low. people should get invested in the stock market. >> i agree with you on buybacks. that's basically what the go-to plan has been for corporate today with so much cash on balance sheets. but i'm a little -- i'm a little confused about why we're not seeing more m&a in an
environment where you have such low record interest rates. i think we're going to look back at these rates and say remember when we could have paid 3%? remember when we were at 1.5% on the 10 year? how come not more deal flow? >> i think companies still are reluctant to invest their capital in other businesses when there are so many uncertainties due to regulation, tax rates, and really seeing the light at the end of the tunnel. usually, when you have companies sitting there with so much cash, they're a target. i don't think that is -- the confidence is not there to extend out into other companies. i think we're seeing very little m & a. and when you look at alternatives to invest your capital, buying back your stock is actually one of the top alt terntives. that's what we're seeing. >> that's going to be a positive for the level of stock prices, you think. >> absolutely. but we shouldn't get confused that that means the economy is doing well. so the economy is still a slow churn. it's doing better. but i wouldn't get confused just because we see a rising stock market. >> which is why everyone's talking about the federal reserve. the economy is under this slow
churn. let me ask you about the fed's role in this market and, of course, the potential for unwinding its stimulus program, the so-called tapering down. today on cnbc the federal reserve bank of dallas, the president, richard fisher, had this to say. listen to this. i want to get your reaction. >> you just slow the pace. and the question is, and we have to hammer this out at the table, by how much do you slow the pace? when you decide to dial back? not stopping. i think that would be too violent for the marketplace. that's my opinion. >> what about that? if we were to see a slowdown, do you think that causes a selloff in stocks? >> absolutely not. i think mr. fisher has always been very direct. in fact, i watched that this morning. i think the fed very much knows everything that we know. that if they decided to stop on a dime, that would be a problem. i think there'll be a coordinated announcement. they'll slow down. they'll figure this out. and i think rates, of course, may move a bit. i think stocks are still going
to rally into this. because stocks offer excellent value versus bonds. however, i think bonds will rise a little bit in yield. but it's not going to be dramatic and the fed wouldn't want to cause that. they are under the same facts that we have. and i think they'll announce that they're going to start to taper off, they'll figure out the timing of this, do it over time and it'll be very, very orderly. i give them a lot of credit for what they've done so far. i think they'll continue to do a good job. >> let me ask you about your ishares business, etf business, among the largest. where are you seeing the flows? where are investors putting the most money in the etf world right now? >> well, the etf market, if you're not invested in it or don't know about it, it's one of the most exciting markets that i've seen in 30 years in doing this. this is a market which solved a lot of problems. transparency, diversification, the liquidity of the stock exchange. so we just launched a few etfs today. our ishares.
and these are ishares that actually have a final maturity. so rather than someone create a huge portfolio of corporate bands, we're going to do that for them. and they'll just be able to buy the ishare. it'll have the liquidity of the stock exchange, diversification, and we'll manage the credit risk for them. we think this is going to revolutionize the bond market. where we're seeing a lot of interest is in the high yield sector. because it still offers yield. we're seeing a lot of interest now that we just launched this product that people are very excited about being able to have a final maturity, so it looks like a bond but has the liquidity of the stock exchange. and we're also still seeing into equity dividend funds, and these ishares are actually seeing a lot of money. now, i heard on the show before someone talking about a great rotation. i just want to tell you the money we're seeing is no rotation. this is new money. >> i see. >> there is 10 trillion of cash. and people are looking for a place to put this. they're not selling equities to
buy this. this money is new money that's coming in to get exposure into the bond market as well as the equity markets. >> it's extraordinary. i made the point earlier that when i was at credit suisse on friday interviewing brady dugen, ceo, i asked him about the fact a third of his accounts in the private wealth management business or private bank are in cash. that's a huge potential for ramp up that that money will ultimately come into stocks. but how come it hasn't moved yeye yet? >> because clients never remember when they made money. they remember every single time they lost money. people lost a lot of money. they don't know what their house is worth yet. they don't know how much they need to save. we need to tell people that you c can't invest for the future in the future. it's not time in cash. it's time in the market. they've got to get invested. at these levels people realize they're living longer. they haven't saved enough for retirement. so brady is right. there are people that are sitting in cash, but it's the wrong thing to do.
they need to use this longevity to work for them, start investing both in the equity market and longer term in the bond market. >> and are you seeing them slowly but surely do that? at this point, it's been 30% of accounts in cash. again, that confidence issue. they're not moving it. >> we're starting to see the movement out of cash. we're encouraging the movement. and we're going to go out and we're going to tell people, you got to think about your longevity. so we're supposed to be good stewards. we're a fiduciary in the market. they're looking for advice. our advice is start moving that cash out. we'll be watching the story as it develops. blackrock president rob kapito. what did the white house know about the irs targeting and when did they know it as lawmakers continue for calls for a thorough investigation. the answers to those questions seemingly changed today in a significant way. we'll take you to washington for
the latest there. later, i'll speak exclusively with congressman kevin yoder from kansas who needs more answers. haley barbour heading up a task force on immigration reform as the bill nears a full senate vote. step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. with centurylink visionary cloud a brinfrastructure, and custom communications solutions, your business is more reliable, secure, and agile.
♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx. ♪ je t'adore, je t'adore, je t'adore ♪ ♪ ♪ s'il vous plait [ male announcer ] this is the pursuit of perfection. with the innovating and the transforming and the revolutionizing. it's enough to make you forget that you're flying five hundred miles an hour on a chair that just became a bed. you see, we're doing some changing of our own. ah, we can talk about it later. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. welcome back. another development this afternoon in the internal revenue service targeting scandal. this one very close to the oval office. john harwood in washington now with the story. john? >> reporter: today the white
house dribbled out a little bit more information about disclosure of the scandal. last week jay carney, white house press secretary, said the white house council's office was informed the week of april 22nd, didn't tell the president. today he clarified that lawyers in the council's office heard the prior week. white house counsel kathy rum ler herself was informed on april 24th. she shared the news with white house chief of staff and other senior officials. carney maintains still they didn't tell the president because there's nothing he or any of them could have done. >> we knew the subject of the investigation and we knew the nature of some of the potential findings. but we did not have a copy of the draft report. we did not know the details, the scope or the motivation surrounding the misconduct. and we did not know who was responsible. most importantly, the report was not final. and still very much subject to change. >> reporter: now, maria, it's important to note that nothing that jay carney talked about today is relevant to the
question of how the targeting started and why it started. we may learn more about that tomorrow at a senate finance committee hearing when we hear from doug shulman who headed the irs throughout the five years -- the previous five years and all of the time period in which this scandal took place. >> all right, john, thank you so much. we've got reaction right now on this scandal that is engulfing the nation's capital. i'm joined by former mississippi governor haley barbour, co-chair of the bipartisan centers immigration task force. he joins me now to talk about immigration and a lot more. good to see you, governor. >> thanks for having me. >> i want to get to immigration in a moment. we had this big development today as you just heard john harwood report. that the president's chief of staff knew about the audit scandal. and they're telling us this now after the fact. but last week it was just the white house counsel's office that said they knew about it. is it unusual that a chief of staff would not tell the president? >> well, you know, this is a story that's like a centipede
dropping shoes. they just keep dropping and dropping and dropping. and it's hard to believe that the chief of staff would not tell the president. i saw lanny davis, who was president clinton's lawyer, he's not some republican, saying that anybody who did not tell the president about this didn't have any business working in the white house. you know, this is a place where they would be better off to just go ahead and name an independent counsel. they're digging themselves in deeper. they're hurting their credibility every day saying, here's some new information. of course, we didn't know anything. >> all right. does it matter? it doesn't feel like anyone's really focused on -- on the details of this. is it really hurting their credibility, you think? why is the president so against an independent council? >> it is hurting their credibility. and the fact that you have to ask that question just speaking to how it hurts their credibility. why won't the president let somebody independent look at something? they say they're innocent. they say they didn't do anything wrong. but they don't want -- they want
to investigate it themselves? it sort of reminds me of my children. >> right. so their agencies are going to investigate what went on. >> nobody falls for that. >> nobody does. you're right about that. but people are comparing this to some of the exploits that occurred in the nixon administration. what's your view on this? compare what's going on. we've got the irs. a.p. scandal. the talking points that were changed on benghazi. what's your take on all of this? >> it's very troublesome for the administration. they're having a very bad time trying to deal with it. i think it's premature to say this is like the nixon thing or anything. i will say this. you didn't get on nixon's enemy list by calling yourself a patriot. that's one thing that is certainly different about this from those days. >> let me turn our attention to your work on immigration. i want to talk about you as co-chair of the bipartisan group on immigration. how happy are you with the immigration bill currently undergoing markup by the senate judicia
judiciary? >> i think it's a good start. i thought marco rubio put that right. that it was a good start. there are areas that need to be sharpened. then you've got the whole house process to go through. i think everybody needs to understand we're early in the process. we're not near the end of the process. i hope and i believe we can have immigration reform that is a gigantic improvement over the status quo. because, maria, if we keep the status quo, we'll have 20 million more illegal immigrants here in the next ten years. we've got to change the status quo. >> given your vision what should immigration policy look like? >> it ought to be geared toward improving our economy. if we're in a global battle for capital and labor, and if we have the right kind of imfwrags reform, we'll bring the right kind of labor into the u.s. whether it's high skill workers or the agriculture workers that we know so that americans continue to eat healthily and
more cheaply than anybody else in the world. but the devil's in the details. >> in fact, the social security administratione eses estimated by -- and boost gdp by 1.63%. >> i doept think there's any question. remember, gdp is a function of multiply and productivity increases by the number of workers. we don't have enough workers in the united states. we have too few -- we have too few people working. but also we need particular skills that we need to add to by bringing more people who come here to work. >> a lot of ceos come on the show. they say we cannot find the workers we need because they don't have the right skill sets. governor, what's your reaction to today's development where you had two big unions representing immigration enforcement agents came out against the bill? they say forget the costs. the bill will damage security and enforcement on the borders. >> well, let's hope we don't let them have the same freedom to run the place like they do the
irs. because we need real immigration reform. i think this. i didn't hear exactly what they said. but the right kind of immigration reform will mean we have a more secure border. we'll put the resources in, but we also will try to cut down the demand for coming here illegally by having the right mix of jobs that'll improve our economy. >> we continue to see reports on the deficit actually getting worse. you know, there was some conflicting reports that actually things looked like they were better. last december you said, and i'm going to quote, hold your nose, end quote. raise taxes on the two top income brackets in return for tax reform and entitlement reforps. we still don't have agreement for any reforms. are you still willing to hold your nose? >> we've already given the tax increase. i mean, that's tone. i wish that the republicans and the congress had said the only way you're going to get your tax increase, mr. president, is if
we get these entitlement reforms. but our guys weren't willing to say they would vote for tax increases even in return. so that's behind us. but we still need tax reform in the united states. we can cut rates and increase revenue by doing it right. it'll also be good for the economy. we need the economic growth. finally, entitlement reform, 60% of the budget is entitlements. i mean, you can't get control of spending in the united states without getting control of entitlement spending. >> most people get that. >> sure. >> even though they're fwoing to lose something, they understand we've got to get our fiscal house in order. >> obama thinks what's wrong with americans, we tax too much? it's not that we tax too much, it's that we spend too much. >> when to you think we'll see the outside counsel investigating the irs targeting scandal? >> republicans hope it will take longer because the administration will do more damage to itself. >> i see. the fight continues. governor, good to have you on
the program. >> thank you, maria. up next, talk about pressure. tomorrow is day of reckoning for jpmorgan and chase. chairman and ceo jamie dimon, he's battling to keep both of those titles. we'll discuss the changing face of banking. stay with us. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 ...helps me keep an eye on what's really important to me.
tdd#: 1-800-345-2550 it's packed with tools that help me work my strategies, tdd#: 1-800-345-2550 spot patterns and find opportunities more easily. tdd#: 1-800-345-2550 then, when i'm ready... act decisively. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 with the exact same tools, the exact same way. tdd#: 1-800-345-2550 and the reality is, with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 ...until i choose to focus on something else. tdd#: 1-800-345-2550 all this with no trade minimums. and only $8.95 a trade. tdd#: 1-800-345-2550 open an account with a $50,000 deposit, and get 6 months commission-free trades. tdd#: 1-800-345-2550 call 1-877-656-8748 tdd#: 1-800-345-2550 and a trading specialist tdd#: 1-800-345-2550 will help you get started today.
welcome back. jpmorgan ceo jamie dimon learns his fate tomorrow. shareholders will vote on the controversial proposal to force dimon to split the chairman and ceo roles. banks in general coming under more scrutiny from not just shareholders but washington. is this part of the new normal for banks. ben white, chief economic correspondent of politico and alex sanchez of the florida bankers association here to disusz it. good to see you guys. thanks very much for joining us. ben, we're focused on the jamie dimon vote tomorrow. is that just indicative of the new landscape for banks right here which is obviously much higher regulatory landscape than we've seen in past? >> yeah. they're a very popular topic in washington these days. and they are under a lot of pressure. and i think, you know, the focus on jamie dimon and jpmorgan is part of that. and the reason that shareholders are able to get more traction for that is the sort of broader movement to question whether these banks are too big and too powerful. i think you're going to see that continue in washington. you're going to see moves to
have the last parts of dodd/frank be very tough. to have increased regulatory capital. i don't think you'll ever see a flat break up the banks bill. i don't think there's a political will for that. a lot of leadership on both sides is not for that. you could have banks decide if we've got to hold this much capital, we're going to break up anyway. it would be a back door breakup rather than a frontal assault. >> what do you think, alex? >> maria, great to be on the show today here with you. i think mr. dimon has been a great -- one of the great leaders of our corporate world. and he will obviously comply with any of the governance issues. like most things, you know, like any shareholder meeting, you know, ten years ago people just maimed in the votes. i think people in tougher times like we're living in are being more careful. i think our banks, our world changed in 2008. obviously we're under much more scrutiny. i agree with ben. i don't think breaking up the big banks is the answer. we're in a global marketplace,
maria, as you know. where only four of the top 50 banks in the world are from the united states. china has six. germany has five. france has five. i think breaking up the big banks in our global environment is not the answer. what are we going to do, ma rhee wra, when caterpillar or any other major u.s. corporation goes to the bank of china for a loan? i think congress then will have hearings to find out what happened to us. and so we've got to be very careful. what we really need to concentrate, maria, on are our community banks and regional banks being drowned out by the regulation of dodd/frank. that's what congress needs to concentrate on, maria. >> what about that, ben? obviously we've talked -- i've talked a lot on this program about the changing landscape for banks. you've got regulators across the world. you've got some focused on capital and liquidity like a dan tarulo at the federal reserve. others focused like in switzerland on compensation. where you can't have -- you've got to have your highest paid no
more than 12 times what the lowest person is paid. how does this play out? >> i don't think a lot of this stuff will get applied to banks in the united states. i think you'll see more pressure from shareholders on compensation and leadership as you see at jpmorgan. i don't think in the united states you'll see more congressional efforts to crack down on executive compensation at the banks. you've seen some of that come down. skramy dimon obviously had his pay cut before this move to strip him of the titles. you have still a very powerful bank lobby in washington. i think it gets lost a little bit that a lot of the noise is around what are we going to do to end too big to fail? what are we going to do to stop these banks from taking all this risk? when you look at what's happening in terms of the emp policemenation of a lot of regulations, cftc watered down some of the regulations for derivatives for swaps. wall street won that one. i think they'll win other ones. it'll be a question to see whether the dodd/frank rules on
prop trading come down hard. i think banks are winning more than losing in washington even though there's momentum and noise around break up the banks. >> maria, look, banks have stress testing. bigger banks, larger banks have stress testing, have higher capital, have the cfpb, as ben said. >> all right. alex, we are going to get back to that conversation. we obviously had a technical difficulty there with the live shot of alex sanchez. you get the point. we have seen, in fact, a lot done on the positive side for banks, raising of capital, cutting of debt. yet the breakdown between the industry and the -- and really society continues. we'll watch that. up next, is the irs watching you? up next, why you may want to think twice about what you post in your social media sphere. wait till you hear what the irs is scrutinizing and how you can figure out if you're being targeted. following the trail inside the obama administration.
it's easy to follow the progress you're making toward all your financial goals. a quick glance, and you can see if you're on track. when the conversation turns to knowing where you stand, turn to us. wells fargo advisors. where you stand, turn to us. lets you jump backwards and forwards in time to capture the perfect shot. blackberry z10 with time shift. built to keep you moving. see it in action at blackberry.com/z10 how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age.
♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ available out there. i knew devry university would give me the skills that i needed to make one of those tech jobs mine. we teach cutting-edge engineering technology, computer information systems, networking and communications management -- the things that our students need to know in the world today. our country needs more college grads to help fill all the open technology jobs. to help meet that need, here at devry university, we're offering $4 million dollars in tech scholarships for qualified new students. learn more at devry.edu. welcome back with the irs scandal in the news. jackie deangelis look agent the telltale signs you may be in the cross hairs of an audit.
>> one in every 100 americans gets awe itted according to the irs as of 2010. if you've been through the process you know it can be very painful. here's things you can do to potentially avoid it. don't go bragging on social media sites about nonpayment or underpayment of taxes. sounds simple. you would be surprised how many people actually go and do it. second, if you're buying or selling something online, don't declare a different value on your tax return. they could easily find that discrepancy. consider that information posted online to be public. there's no reason to think that the irs isn't going to go poking around on the web. third don't. ready? do not claim noncash deductions on your tax return that aren't reasonable. things like cars or clothes. if the amounts seem too high, the irs will notice. for those self-employed or work in cash businesses, know the irs is likely watching you a little more carefully. don't file information that's not going to match up with what others are filing about you. meantime, wealthy taxpayers are
also a target. that's because the amount recovered by the irs, of course, is greater if issues are found in those cases. now, according to the irs data, taxpayers making $1 million or more, they are 12 times, 12 times more likely to get audited, maria. >> all right, jack, thank you so much. jackie deangelis. with news today the white house chief of staff learned about the irs scandal after the auditing stopped but reportedly did not tell the president, we turn to president congressman kevin yoder, who has been demanding accountability and is also calling for an overhaul of the irs. he joins me right now. congressman, good to have you on the program. thanks for joining us. >> thanks for having me on, maria. >> what is your reaction to the news today that the white house chief of staff knew about the irs report before it was released but the administration says the president was not informed? is that typical that the chief of staff would not tell the president? >> every day we learn something new in washington, d.c. a new revelation about who knew what and when they knew it. so it's not really surprising. it's what a lot of us suspected. we think the administration knew
about these special audits going on against conservative groups for a long time. and they chose willful ignorance on behalf of the president. the president has the ability to sidestep this and say, look, this was my administration. i had nothing to do with this. it opportunity really shock us that upper administrative officials knew about this. that's part of the reason why we need a full investigation, maria. we need to know who knew what, when they knew it and what they did about it. at this point a lot of the details are still hazy. every day the story out of the administration changes. this is one of those cases where i think capitol hill is still stunned to learn that the irs actually targeted individual americans or groups of americans based upon their ideology and harassed them with audits and additional requests for paperwork. it strikes the heart of our freedom and democracy in this country. it's really one of those issues that both republicans and democrats are concerned about and we've got to get to the bottom of. >> the president, i believe, has said we're not going to have an independent outside counsel. you think that that will, in fact, materialize? >> i think we'll get there.
i think that the department of justice can't be the ones investigating this issue because we have too many folks that are too close to this to be able to be fair and impartial. we need independent investigation here because we have some real challenges with getting answers out of this administration. americans are rightfully angered about this. and they're expecting congress and they're expecting the federal government to fully investigate this, get to the bottom of it, hold individuals accountable, both civilly and criminally. and to make sure this never happens again. >> well, let me ask you this. about a year ago then irs commissioner doug shulman appeared before your house appropriations sub kmit tee. you asked him about similar allegations. what did he tell you then? >> we asked him directly are you targeting or is the irs targeting conservative groups? are they targeting any groups based upon political ideology. he told me then and the committee then it wasn't happening. and it couldn't have happened. he invoked nixon. after nixon we put safeguards in place so it could never happen
again. i assure you it's not happening. we got to know when commissioner shulman knew what was going on there. we're finding out shortly after he testified before my committee he knew. did he know beforehand? we now know he knew afterwards and didn't come back and correct the record. that's one of the challenges we have. not only the incident itself but why didn't anyone come before congress and when they testified actually corrected the record? we feel very misled on this. because we were asking direct questions, ma rhee wra. is this happening? they were telling us all along no, no, no. it can't happen and it wouldn't happen. it's not possible. now we know that it was and we know that officials within the irs knew about it including folks in washington. first they said, maria, it's just a few folks in cincinnati. we didn't know anything about it. later they said, well, okay, the commissioner knew about it. acting commissioner miller knew about it. now they're saying folks in the white house knew the investigation was going on. yet nobody said anything. nobody took any efforts to stop it. maria, up until last week this was probably still going on. there are still groups that still have yet to hear back from the irs three years after the fact. we've got a lot to work to do to find out what really happened here. >> you're co-sponsoring a bill to extend privacy protections
for electronic communications. that third party service providers store. you say this idea was spurned by irs officials? >> yeah. the irs, not surprisingly, i guess, in recent months, before this whole recent concontrovers but prior to that came out and announced they had actually been reading e-mails of americans without a warrant. they justify this through a 1986 act that allows them to review e-mails without a warrant on the individual who has the e-mails, review them as long as they are 180 days old or they are opened. so they have admitted, yes, we are reading the e-mails of americans without warrants as long as they are opened. we can do that under federal law. when pressed on this their response was, well, americans do not have an expectation of privacy within their e-mails. we just think this is absolutely wrong. we think the fourth amendment ought to apply to e-mails just like they apply to paper mail and any other documents that we contain. the federal government doesn't have a right to search or seize these documents. they need a warrant.
the e-mail and privacy act comes in and essentially requires the the irs and other federal agencies to have a warrant to ensure e-mails we send in this country are protected and safe and not being read by the federal government. >> congressman, good to have you on the program. thanks formaria. >> representative kevin yoder from kansas. only one winner in that massive power ball jackpot. one winner. what's the one stop this weekend's lucky winner should buy tomorrow? the money pros throw in their two cents next. [ male announcer ] at his current pace,
bob will retire when he's 153, which would be fine if bob were a vampire. but he's not. ♪ he's an architect with two kids and a mortgage. luckily, he found someone who gave him a fresh perspective on his portfolio. and with some planning and effort, hopefully bob can retire at a more appropriate age. it's not rocket science. it's just common sense.
welcome back. $600 million shuure is a lot of money for one person. 30 seconds on the clock, our panel is here to tell you which stock they would buy tomorrow. chad and jim. chad, you're up first. which stock do you want to buy with all that money? >> maria, i would buy walmart. walmart is a core holding, it's consistently growing, consistently profitable and well capitalized. it has a dividend of about 2.4%, and that dividend will grow roughly about 13% next year. and with, you know, revenues of
that $490 million, that's for 2013. we think it's a great core holding. our price target on walmart is $83. >> thank you. jim, over to you. which one do you want to put money on? >> thanks, maria. i'd recommend microsoft, which continues to dominate its space while remaining flexible to changing industry conditions such as the popularity of the tablet computer. the investment merits are considerable, including strong profit margins and very high free cash flow. however, i think the most compelling reason of all is that the success of microsoft has contributed directly to the success of the bill and melinda gates foundation. and i'd recommend it for that reason, as well. after all, what better use is there for a lottery jackpot? >> all right. we'll leave it there. thank you very much. we'll watch those two names. appreciate your time. up next, why the french are fried and american taxpayers could be next. that's next. ♪
[ engine revs ] ♪ [ male announcer ] just when you thought you had experienced performance, a new ride comes along and changes everything. ♪ the 2013 lexus gs, with a dynamically tuned suspension and adjustable drive modes. because the ultimate expression of power is control. this is the pursuit of perfection. ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪
how lincoln financial can help you take charge of your future. with centurylink visionary cloud a brinfrastructure, and custom communications solutions, your business is more reliable, secure, and agile. we have breaking news right now. i want to get to tyler mathison with that. >> we are watching very, very damaging tornados south of oklahoma city that have touched down within the past hour.
looking now at live pictures from a helicopter by nbc affiliate kfor. the pilot there says that one of the twisters that touched down was about two miles in width. there is widespread damage, some reports from the oklahoma city police department, apparently of people trapped in buildings. we have seen pictures just in the past few minutes, maria, of a major blaze that appears to have broken out in what looks to me like some kind of commercial or warehouse building. there are also unconfirmed reports that there is damage particularly in southern portions of oklahoma city and as i mentioned, in the suburb of moore, there are lots of live power lines down. people are being advised to stay indoors, transportation and travel, basically very, very sort of dicey right now, maria. and there are also reports of gas leaks. we're going to continue to watch this, but obviously a major part of the center of the country is really under a tornado threat
this afternoon and into tonight just as they have endured over the past 24 hours or so. if we get more, folks, we'll be back to you. >> thanks very much. we want to check in with brian norquist from the weather channel right now to talk more about this. what can you tell us? >> violent tornadoes, you've been talking about, moving through more oklahoma, more south of downtown oklahoma city. this is just south of where the incredible tornado went through in 1999, and this looks like tornado of similar character, maybe a little larger in diameter. it's hit, we know, two schools. i don't know if you've reported that or not, we do not know at this point whether there were people in those schools or whether they had been evacuated. this looks like a wider path than the violent 1999 tornado, likely in the ef-4, to ef-5 range. ef-5, being the strongest possible tornado. the bottom line is we know we
have an extremely wide tornado path, through just south of downtown, moore, oklahoma, a southern suburb of oklahoma city. we know there's tremendous damage, likely more damage than 1999 based on what we've seen on the radar. and from the helicopters there. and we know that there's going to be just extensive damage and a storm threat continuing in that part of the country where we have conditions still favorable for tornadoes going well into the evening until late evening eastern time. >> thank you, thank you, brian. we'll watch the weather channel for that. my observation returns tomorrow, here's "fast money" which begins tomorrow. thanks for joining us on "closing bell." we'll follow that story in oklahoma, as well. but right now, we are live from the nasdaq market site in new york city's time square. i'm scott wapner in this evening. here's what we're following on "fast,"